Applications for US unemployment aid remain at 43-year low

The Canadian PressPublished October 13, 2016 - 10:48am Last Updated October 14, 2016 - 3:10am

WASHINGTON — The number of Americans seeking unemployment benefits stayed at a 43-year low last week in the latest sign that layoffs are scarce.

THE NUMBERS: Weekly applications for unemployment benefits were unchanged at a seasonally adjusted 246,000, the Labor Department said Thursday. The four-week average, a less volatile measure, fell 3,500 to 249,250.

Both figures were at their lowest levels since November 1973.

The number of people receiving aid fell 16,000 to just over 2 million. That is the fewest since June 2000.

THE TAKEAWAY: Applications are a proxy for layoffs, so the figures indicate that companies are cutting very few jobs. With the unemployment rate down to 5 per cent, from 10 per cent in October 2009, some businesses say they are having trouble finding qualified workers. That suggests they are less likely to lay anyone off.

KEY DRIVERS: The four-decade low in unemployment claims suggests the job market remains resilient. That's a key reason the Federal Reserve is likely to raise the short-term interest rate it controls by the end of the year.

Hiring has been solid this year, even as economic growth has been slow. The economy expanded at a pace of just 1.1 per cent in the first half of the year, though most economists expect it to pick up a bit.

Job gains have weakened a bit from the robust gains of the two previous years. Hiring averaged 178,000 a month in the first nine months of 2016, down from an average of 230,000 last year.

Still, that level of hiring is enough to reduce the unemployment rate over time, economists say.

Last month the rate ticked up to 5 per cent from 4.9 per cent, but mostly for a good reason: More Americans came off the sidelines and looked for work, a sign they were more confident in their prospects. Not all found jobs, so the rate rose. Americans who are out of work, but aren't actively looking, aren't counted as unemployed.

The number of job openings fell to the lowest level in eight months in August, the government said Wednesday, suggesting hiring could slip. Still, openings remained at a healthy level.